EDITORIAL: Morneau’s pre-sell, federal budget

Finance Minister Bill Morneau speaks in the House of Commons in Ottawa.

Pre-budget secrecy used to be a first principle for Canadian finance ministers.

Today, as Finance Minister Bill Morneau knows, it’s best to hype a budget the way Hollywood markets an upcoming blockbuster. That is, you have to tell people what the big extravaganza is all about before the viewers (and the critics) get a chance to make up their own minds.

No surprise then that Mr. Morneau has used the pre-budget period to chant the ever-populist Robin Hood mantra; he’s going to take from the rich and give to the poor.

Mr. Morneau told central bankers in Frankfurt last week that he wants to ensure that the wealthy aren’t the primary beneficiaries of economic growth.

Given the growing “wealth gap” in Canada and around the world, it would seem to make sense to introduce progressive taxation measures that ask the wealthy to pay more in taxes while enabling the government to help those who earn less and/or need more.

Mr. Morneau has made it clear he wants to use tax revenues to help Canadians develop skills to find employment in a dynamic and challenging economy. He will probably introduce measures, then, to foster the knowledge or innovation sector, and to help people prosper in the new economy. It’s also an open secret that the Trudeau government would like to use this budget to introduce multi-year funding for child care, a measure that’s been promised for decades but never implemented.

So much for the budget measures Mr. Morneau wants to highlight on this movie marquee.

What about the budgetary and economic challenges he hasn’t stressed? For starters, let’s be clear that Wednesday’s budget is going to bomb at the box office. Our national government is running a deficit estimated at $25.1 billion in the fiscal year ending March 31, and Mr. Morneau’s number crunchers have said it will increase to $27.8 billion in 2017-18.

Mr. Morneau hopes, as finance ministers do, that increasing debt will be offset by strong economic growth. That is no certainty. Mr. Morneau’s critics on the right argue that higher taxes on wealthy Canadians will encourage them to take their money and invest it elsewhere.

This feels like a tired argument, but with U.S. President Donald Trump threatening to lower taxes on the wealthy and on corporations, it’s no stretch to suggest that investment dollars could flow south of the border, or anywhere else that seems to promise greater returns on capital.

Speaking of Mr. Trump, Mr. Morneau must also be worried about the president’s on-again, off-again threat to punish the Canadian economy by imposing import fees on Canadian exports or taking other protectionist measures.

None of this is to criticize Mr. Morneau, whose budget will no doubt reflect the agenda on which the Trudeau government was elected in the first place.

We just have to hope, as does he, that his budget forecasts for economic growth over the next few years correspond roughly to reality.